Do you want to improve your PPC campaigns? We have 5 metrics to consider before launching your next PPC advertising campaign.
Understanding how to calculate ways to advertise can improve the areas where you spend your money on pay per click advertising. You will have a clear view as to where you should spend more money on ads, versus what ads are not generating as much traffic. This strategy will help you to keep on budget overall.
The first metric, which is the most important, is Return on Investment (ROI). This metric can calculate how much you can make back after investing a certain amount. It can also give insight on keywords that need to be adjusted, increasing conversion rates, and getting results on test ads.
The formula is: (Revenue - Cost)/Cost x 100 = ROI%
The second metric is Cost Per Leads, which is used to see where your campaign needs to be profitable.
Take the number of leads that you think you can get from the campaigns:
(Advertising Budget/ Average CPC) x Landing Page Conversion Rate = Number of Leads.
Then, determine how much it will actually cost per lead:
Advertising Budget/ Number of Leads= CPL
This formula can be used to help determine the performance of your campaign and help your business set short term campaign goals. Also, usually there is a 3-4 day period before you will start to see improvements, so you may not be hitting all your goals on day 1.
The third metric, Close Ratio, can show your business’ percentage of closed deals.
Close ratio: Number of Sales/ Number of Leads= Close Ratio
A good close rate usually varies between 20-30%.